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Zero-carbon costs are falling but challenges remain

A recent report by the Zero Carbon Hub shows the estimated cost of meeting the Zero Carbon Standard for homes is falling.

While this is welcome news, achieving the target set down by government still represents a major challenge.

The report estimates that the cost over the requirements of Part L 2013 of achieving the zero-carbon standard will be £3,700 to £4,700 for a semi-detached home and £6,700 to £7,500 for a detached home.

While these figures have come down, they still represent a considerable challenge – especially when set alongside other requirements typically expected by local authorities, such as affordable housing and the community infrastructure levy.

Increasing housing supply

All parties now accept the need to increase housing supply. The government clearly recognises the social and economic drivers for doing so and has introduced a range of positive policies aimed at stimulating supply.

The Help to Buy equity loan scheme has gone a long way towards addressing the biggest short-term constraint on supply: a lack of affordable mortgage lending, while the National Planning Policy Framework is now being implemented more broadly and is beginning to deliver more land for development.

“It is vital that local authorities take the costs associated with building zero-carbon homes into account”

Site viability, however, remains critical. Sites will only support a certain level of regulatory and policy cost. If central and local government try to extract too much, development won’t take place.

This is why it is vital local authorities take the costs associated with building zero-carbon homes into account and ensure they include these costs when assessing the deliverability of their housing plans.

If they don’t, and the sites they identify are not properly assessed – as the NPPF and accompanying guidance advises – there is a risk that the homes needed to support their local communities won’t get built, and local authorities may be vulnerable to appeal if they are unable to sustain delivery.

Falling costs

The Hub’s report highlights the reductions in cost we are now seeing on elements such as solar PV, airtightness and thermal bridging components.

As a result of these savings, the Hub estimates that the cost of building to zero-carbon has roughly halved since its last estimates in 2011.

However, while the cost of energy-efficient components may be falling, there is a risk that these savings will be more than offset by an increase in labour costs.

To allow for this, the Home Builders Federation recommends that local authorities should avoid setting policy right up to the margin of viability, but leave some room to absorb unforeseen costs as well as providing a competitive return to landowners.

If the increase in housebuilding activity is to be sustained, local authorities must take into account the future cost of zero-carbon homes when preparing their local plans or deciding on a CIL.

The new report by the Zero Carbon Hub provides an excellent starting point for them to do so.

The government’s stated aim of building all homes to its Zero Carbon Standard from 2016 onwards is still some way off. But a recent report from the Zero Carbon Hub has revealed that the added costs of building to the standards have halved in the past two years. So why the cost has come down and what more needs to be done to implement the standard across the industry?

Balfour Beatty and Carillion are among industry giants who have signed an open letter to communities minister Stephen Williams calling for clearer policy from the government on zero carbon non-domestic buildings.

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